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A wall of money outweighs virus fears — for now

Masks, back-to-front boarding, wipes. As air travel rebounds slightly from a near standstill in March, airlines prepare to reduce the anxiety around flying.

Posted: Jun 16, 2020 8:41 AM
Updated: Jun 16, 2020 8:41 AM

Concerns that a surge of coronavirus cases in parts of the United States and Beijing could derail the fledgling economic recovery were hanging over markets. Then the Federal Reserve stepped in.

What happened: The central bank kickstarted a Main Street lending program that aims to encourage banks to lend to struggling small and medium-sized businesses. It also said Monday that it would begin scooping up corporate debt, including junk bonds. The central bank already began buying corporate debt ETFs last month.

The announcement sent the iShares iBoxx $ Investment Grade Corporate Bond ETF — the most closely-watched gauge of US investment-grade corporate bonds — up 1.4%. It closed near its all-time high.

"With the Federal Reserve back in business backstopping corporate credit, and printing money to lend to companies directly, it was immediately back to business as usual for the peak-virus, buy-everything herd," Jeffrey Halley, senior market analyst at Oanda, told clients Tuesday.

Bloomberg also reports that the Trump administration is preparing a proposal for $1 trillion in infrastructure spending to help revive the US economy. A preliminary version of the plan would send money to build roads and bridges, as well as 5G wireless networks and rural broadband.

The stimulus news is sending stocks higher after a bout of volatility. The S&P 500 finished 0.8% higher on Monday and is up 1.3% in premarket trading.

But that doesn't mean Wall Street is entirely bullish. Per Bank of America's June survey of fund managers published Tuesday, investors are past "peak pessimism," but their optimism is "fragile" and "neurotic."

The largest number of fund managers since 1998 think the stock market is "overvalued." Just 37% of those polled are prepared to say we're in a new bull market, while 53% still call recent stock gains a "bear market rally" and are bracing for another fall.

The CNN Business Fear & Greed Index, which measures the emotion driving the market, is now in "neutral" territory after hitting a "greed" reading one week ago. That suggests investors are looking for the next catalyst, even if they've found some relief in stimulus commitments for now.

Oil demand won't recover for years due to aviation crisis

Oil demand is starting to bounce back from its biggest drop in history, but continued strain on the aviation industry means demand won't fully recover until at least 2022.

That's according to the latest report from the International Energy Agency. The Paris-based agency said in forecasts released Tuesday that it expects oil demand to plunge by 8.1 million barrels per day this year before recovering by 5.7 million barrels in 2021. That's a huge rebound, but would still put demand below 2019 levels. The forecasts assume that countries will continue the gradual process of reopening their economies.

"The aviation industry is facing an existential crisis," the IEA said. "Jet and kerosene demand will remain under pressure well beyond this year."

Some improvement: The IEA raised its 2020 demand forecast by nearly 500,000 barrels per day due to a stronger-than-expected pickup in China in March and April, and a sharp rise in demand in India in May. Even so, the 2020 decline will be the worst on record.

The IEA cautioned that lingering behavioral changes due to the pandemic could case longer-term changes to patterns of demand. A rise in remote working could lead to less traffic and business travel, while an improvement in air quality in many cities could spark a push for broader changes, the agency observed.

See here: The IEA noted that bike lanes have recently been created in more than 150 major cities as an alternative to public transport. But fear of public transit could also lead more people to use cars in the near term.

Investor insight: Brent crude futures, the global benchmark for oil prices, are trading back above $40 per barrel Tuesday as an uptick in demand catches up with recent supply cuts from OPEC and other producers. But oil prices have been unable to push much higher recently, and remain far below where they started the year.

Could this summer yield record job gains?

Job postings remain well below levels seen last year, but there are signs of gradual improvement.

As of last Friday, the number of job postings on the website Indeed was 31% lower than in 2019. The site said that the trend has improved over the past six weeks. On May 1, postings were down more than 39% from a year earlier.

Where jobs are coming back: Indeed said that job postings have rebounded more, after falling less to begin with, in smaller cities and more rural areas. Larger cities with more social distancing measures in place continue to struggle.

This data bolsters some of the optimism that's followed the US unemployment report for May, which found that the economy added 2.5 million jobs last month.

Goldman Sachs said in a note to clients this week that it expects "historically strong" job gains this summer, with 2 million or more positions added per month on average.

However, stimulus from Congress will remain crucial to prop up disposable income, according to the investment bank. Support will be needed well into 2021, chief economist Jan Hatzius said, or the recovery could be at risk.

Up next

US retail sales for May post at 8:30 a.m. ET.

Also today:

  • US industrial production data for May arrives at 9:15 a.m. ET.
  • Federal Reserve Chair Jerome Powell testifies before the US Senate starting at 10 a.m. ET.

Coming tomorrow: Powell's testimony continues before the US House of Representatives.

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 111505

Reported Deaths: 3506
CountyConfirmedDeaths
Marion20699758
Lake10217318
Elkhart6368109
St. Joseph604597
Allen5965200
Hamilton4676109
Vanderburgh334129
Hendricks2650122
Monroe240836
Johnson2257122
Tippecanoe221013
Clark211756
Porter205244
Cass19319
Delaware187061
Vigo176622
Madison157775
LaPorte136737
Floyd130361
Howard127563
Kosciusko119017
Bartholomew114957
Warrick114135
Marshall98524
Dubois94918
Boone94446
Hancock90542
Grant88233
Noble88132
Henry76324
Wayne73914
Jackson7349
Morgan69638
Shelby66529
Daviess64127
LaGrange63011
Dearborn62628
Clinton59112
Harrison56024
Putnam5329
Montgomery50521
Lawrence50328
Knox4869
White47914
Gibson4744
Decatur45339
DeKalb45011
Miami4243
Fayette41813
Greene41835
Jasper3822
Steuben3677
Scott35310
Sullivan32912
Jennings30912
Posey3020
Franklin29725
Clay2925
Orange28224
Ripley2788
Carroll27013
Wabash2638
Washington2581
Whitley2526
Starke2517
Wells2472
Adams2443
Jefferson2433
Fulton2352
Huntington2213
Spencer2194
Tipton21722
Perry20913
Randolph2067
Jay1700
Newton17011
Owen1641
Martin1620
Rush1514
Pike1411
Vermillion1260
Fountain1152
Pulaski1141
Blackford1132
Crawford1030
Brown1013
Parke932
Benton880
Union770
Ohio767
Switzerland680
Warren401
Unassigned0225

Ohio Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 144309

Reported Deaths: 4615
CountyConfirmedDeaths
Franklin25977603
Cuyahoga17092642
Hamilton12756308
Montgomery7501152
Lucas7119357
Butler563299
Summit5096249
Marion306347
Mahoning2991279
Warren291048
Stark2739168
Pickaway263344
Lorain226386
Delaware213520
Fairfield202050
Columbiana191980
Licking185762
Trumbull1848131
Clark172338
Wood170671
Clermont162620
Lake157649
Medina143038
Allen136767
Greene135228
Miami135049
Portage107466
Mercer105317
Tuscarawas91220
Wayne90166
Erie89944
Ross85622
Richland78419
Madison78012
Darke76039
Belmont70727
Geauga70347
Hancock6579
Ashtabula64348
Athens5972
Lawrence59418
Shelby5819
Auglaize5659
Sandusky55420
Putnam54123
Huron5237
Union4932
Ottawa46530
Scioto4646
Seneca43914
Preble42013
Holmes3717
Muskingum3712
Jefferson3184
Henry29712
Champaign2933
Logan2933
Perry2859
Defiance28110
Clinton27813
Knox27815
Brown2752
Hardin25013
Morrow2492
Washington24823
Fulton2341
Jackson2314
Coshocton23011
Fayette2256
Ashland2234
Highland2203
Crawford2186
Wyandot20112
Williams1983
Gallia18012
Meigs1729
Hocking1619
Pike1580
Guernsey1567
Carroll1507
Adams1214
Van Wert1113
Monroe10618
Paulding1010
Harrison611
Morgan470
Vinton453
Noble270
Unassigned00
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